LONDON, July 22 (Reuters) - Ukraine's bond prices jumped

on Monday after the government struck a preliminary deal to

restructure roughly $20 billion of the country's debt with a

core group of its bondholders.

The agreement, which should enable the nation to cut the

face value of its debt by more than a third, was more favourable

than many analysts had expected and sent Ukraine's bonds up

almost 15%, in their biggest single-day move in years.

One bond that provides additional payments when the

country's economy grows leapt nearly 7 cents

to almost 57 cents in the dollar. Others climbed to between 31

and 37 cents, having been in the mid-to-high teens early last

year..

If the deal goes through as expected, it will ensure Ukraine

avoids what could have been a messy default next month that

would have complicated a difficult situation as its war with

Russia continues.

Monday's proposal would see a 37% nominal write-down, or

"haircut", on Ukraine's international bonds, saving Kyiv $11.4

billion in payments over the next three years - the duration of

its current International Monetary Fund (IMF) programme.

In return, bondholders will receive bonds worth 40 cents of

their original claim. These will restore interest payments

immediately, and the rate will start at 1.75% before rising to

4.5% from 2026, 6% from 2027 and 7.75% from 2034 onwards.

They will also receive a bond worth 23 cents, which will not

pay interest until August 2027, but could increase to 35 cents

if Ukraine's economy outperforms IMF targets by at least 3% come

2028.

"Overall bondholders have been treated quite well," Viktor

Szabo, an emerging market portfolio manager at abdrn in London,

said.

He said the deal had shown flexibility and that the

valuation was closer to an initial proposal put forward by

bondholders' last month than the government's original offer.

"It will also be by far the fastest restructuring we have

ever seen and are probably ever going to see," Szabo added,

although it comes with a caveat that another might be needed

unless the war with Russia ends.

The deal also boosted a bond of Ukrainian state-owned power

company, Ukrenergo, which is guaranteed by the Ukrainian

sovereign. It jumped over 6 cents to around 45

cents on the dollar according to Tradeweb prices.

Others, however, belonging to state energy company Naftogaz,

which were restructured last year, rose a far more modest 0.7

cents to just over 76 cents as the firm's CEO Oleksiy Chernyshov

said another restructuring might be considered for its 2026 debt

payments.